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| Saudi Arabia triples VAT to support coronavirus-hit economy | Saudi Arabia triples VAT to support coronavirus-hit economy |
| (2 months later) | |
| Saudi Arabia is tripling its value added tax (VAT) as part of austerity measures to support its coronavirus-hit economy. | Saudi Arabia is tripling its value added tax (VAT) as part of austerity measures to support its coronavirus-hit economy. |
| The government in Riyadh also said it will suspend its cost of living allowance to shore up state finances. | The government in Riyadh also said it will suspend its cost of living allowance to shore up state finances. |
| The oil-rich nation has seen its income plummet as the impact of the pandemic has forced down global energy prices. | The oil-rich nation has seen its income plummet as the impact of the pandemic has forced down global energy prices. |
| The kingdom first introduced VAT two years ago as part of efforts to cut its reliance on world crude oil markets. | The kingdom first introduced VAT two years ago as part of efforts to cut its reliance on world crude oil markets. |
| Saudi Arabia's state news agency said VAT will increase from 5% to 15% as of 1 July, while the cost of living allowance will be suspended from 1 June. | Saudi Arabia's state news agency said VAT will increase from 5% to 15% as of 1 July, while the cost of living allowance will be suspended from 1 June. |
| The allowance of 1,000 riyals ($267; £217) per month to state employees was introduced in 2018 to help offset increased financial burdens including VAT and a rise in the price of petrol. | |
| "These measures are painful but necessary to maintain financial and economic stability over [the] medium to long term... and overcome the unprecedented coronavirus crisis with the least damage possible," finance minister Mohammed al-Jadaan said in the statement. | "These measures are painful but necessary to maintain financial and economic stability over [the] medium to long term... and overcome the unprecedented coronavirus crisis with the least damage possible," finance minister Mohammed al-Jadaan said in the statement. |
| The announcement came after state spending outstripped income, pushing the kingdom into a $9bn (£7.2bn) budget deficit in the first three months of the year. | The announcement came after state spending outstripped income, pushing the kingdom into a $9bn (£7.2bn) budget deficit in the first three months of the year. |
| That's as oil revenues in the period fell by almost a quarter from a year earlier to $34bn, pulling down total revenues by 22%. | That's as oil revenues in the period fell by almost a quarter from a year earlier to $34bn, pulling down total revenues by 22%. |
| At the same time Saudi Arabia's central bank saw its foreign reserves fall in March at their fastest rate in at least two decades and to their lowest level since 2011. | At the same time Saudi Arabia's central bank saw its foreign reserves fall in March at their fastest rate in at least two decades and to their lowest level since 2011. |
| The measures to fight the impact of coronavirus are expected to slow the pace and scale of economic reforms launched by Crown Price Mohammed bin Salman. | The measures to fight the impact of coronavirus are expected to slow the pace and scale of economic reforms launched by Crown Price Mohammed bin Salman. |
| Last year Saudi Arabia raised a record $25.6bn in the initial public offering of shares in state-owned oil giant Aramco in Riyadh. | Last year Saudi Arabia raised a record $25.6bn in the initial public offering of shares in state-owned oil giant Aramco in Riyadh. |
| The share sale was at the heart of Crown Prince Mohammed bin Salman's plans to modernise the economy and wean it off its dependence on oil. | The share sale was at the heart of Crown Prince Mohammed bin Salman's plans to modernise the economy and wean it off its dependence on oil. |